Strippergate and Starbucks

What the Colacurcios could learn from Seattle's leading companies.

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Residents were shocked, shocked, by Strippergate, the campaign donation scandal that shook the City Council and which, we hear, is now under investigation by the King County Prosecutor's Office (see Buzz). In big-city terms, Strippergate was penny-ante stuff. When the story first broke in the summer of 2003, I received a call from a newspaper columnist in Chicago. He was mocking the fact we would get so worked up over $30,000 in possibly tainted donations coordinated by an ex-governor named Rosellini and a nightclub impresario named Colacurcio. This was everyday stuff in the Windy City. In a town that prides itself on being clean, though, Strippergate seemed to be a rare eruption of naked corruption—or what passes for it here. After all, after more than a year, so far no one has been able to prove much.

But Strippergate is nothing compared to the above-board corruption we tolerate every day—public corruption driven by greed and protected by hypocrisy, indifference, cynicism, or simply by being so commonly in plain sight that we fail to see it, like Edgar Allan Poe's purloined letter "hiding" on the mantle.

This week, Congress passed an election-year bill granting U.S. corporations more than $140 billion in new tax cuts and tax breaks targeted at what The New York Times calls "politically sensitive states." And politically powerful industries, including the big pharmaceutical, oil, and high-tech companies that have amassed huge profits overseas. The bill started as a response to restore some $50 billion in tax benefits to companies like Microsoft and Boeing that had been knocked down by the World Trade Organization. The U.S. government—and Seattle officials—love to bloviate endlessly about the virtues of free trade, but like Christians and the Ten Commandments, they rarely practice what they preach. If "free" trade eliminates tariffs and makes direct subsidies more difficult, there are always targeted tax cuts to keep corporate coffers full (like the state taxpayer gift to Boeing of $3.2 billion). And you can cut in anyone with creative tricks. For example, American industry is on the ropes due to global competition and has been hemorrhaging manufacturing jobs. One way to turn things around is to re-define what a manufacturing job is. The new steel mill, according to this bill, is the coffee company. Thanks to Starbucks' lobbying, coffee roasting is now considered "manufacturing," and it's eligible for new tax breaks and benefits. Yeah, and ketchup is a vegetable.

One good thing Congress did, last week, was kill the $23 billion deal between Boeing and the Air Force to lease 767 refueling tankers, though a deal to purchase tankers is still in the works. But the lease deal was so sleazy from the very beginning, so tainted with outright corruption, that everyone associated with it is smeared with tar. The top Air Force official in the lease deal, Darleen Druyun, has pleaded guilty to inflating the price of the tankers as a favor to Boeing, which then gave her a job. The price to taxpayers of that favor? More than $4 billion in potential overcharges. But last week, Druyun admitted to even more wrongdoing, saying that she did other multibillion-dollar favors for Boeing. The investigation of these acts is expanding, and the fact that Boeing corruption is apparently deeply institutionalized is being further exposed. Boeing has shaken up its leadership—firing CFO Michael Sears and getting CEO Phil Condit's resignation—but Druyun shouldn't be the only one joining Martha Stewart at "Camp Cupcake."

And what about the politicians who aid and abet such taxpayer rip-offs? It's a bipartisan effort. The whole state's leadership is Boeing's bitch. Patty Murray, George Nethercutt, and what about Norm Dicks? Even as the Boeing lease deal was going down, Dicks has remained strapped in his seat as an unabashed apologist for the project, unwilling to admit that the deal was tainted. If the Pentagon wants to renegotiate an honest deal with the company for the tankers—and if there's a proven, genuine need for them, which is currently in dispute—fine: They ought to let Airbus or anyone else compete for the contract, too. Meanwhile, Dicks and Murray ought apologize to—and beg the forgiveness of—the American taxpayers for pushing a deal that was rotten to the core.

In other news, late last week The Seattle Times looked at previously unreleased documents in the University of Washington Medicare billing scandal. Talk about an organization in denial. The feds claim UW systematically bilked Medicare of an estimated $100 million dollars. According to documents, UW claimed that, at most, they'd overbilled $3.5 million, or maybe as little as zero if you included Medicare underbillings, according to the Times. All along, UW has tried to portray the problems as insignificant or as clerical errors and has tried to block the details from public view. The documents reveal that the feds found that not only were some of the problems criminal, but they were routine. Medicare was overbilled in nearly 45 percent of the cases they audited, and the feds contended UW "knowingly submitted thousands of false claims" to the government. The university has settled the case with a $35 million fine, but that means they got to keep nearly $65 million of the ill- gotten gains. I guess that'll teach 'em.

One might forgive the Colacurcios for wondering why people are still so upset with them. I mean, how can you corrupt a political process that generates these kinds of scandals? If they were smart, they'd get Rosellini to lobby to get pole dancing redefined as "manufacturing." If it can work for Starbucks, why not strip clubs?